The sand takes the place of the water in the pan, the waters biggest function (sausage making aside) is to act as a heat sync. Sand does the same thing it holds the heat so when you open the door and close it, it takes less time to get back up to temp. It also keeps things from getting too hot also.
The water on the bottom is for making sausage, keeping the casings from drying out, and also to give the smoke something to 'stick' to, but this only applies to sausage.
If you are smoking butts, briskets, chicken, ribs, or any other meat there is really no need for water so sand is the way to go in my opinion. You will want to use play sand, because it is clean.